‘Made in China’ vs. ‘made in the EU’: what’s the difference?

Dr Rutvica Andrijasevic, Senior Lecturer in Management

Dr Rutvica Andrijasevic,
Senior Lecturer in Management, University of Bristol

Foxconn, a Taiwanese-owned firm best known for being the main assembler of Apple products and for harsh working conditions at its Chinese factories, is the world’s largest electronics contract manufacturer. While Foxconn also operates in Europe, it is from its factories in mainland China that we hear of militarised disciplinary regime, excessive and unpaid overtime, unhealthy and unsafe working conditions and forced student labour.

Just how different is the situation in Europe? I set out to answer this question three years ago along with my colleague Devi Sacchetto from the University of Padua. We conducted 63 interviews in the Czech Republic and 29 in Turkey with current and former Foxconn workers and managers, trade union representatives, government officials and NGOs.

A flexible workforce

Firstly, Foxconn’s production pivots on a flexible and available workforce. Foxconn in mainland China relies entirely on the use of rural migrants. In the Czech Republic, the firm achieves flexibility by employing 40 percent of its workforce through temporary work agencies. These indirectly employed labourers—primarily EU migrants from Slovakia, Poland, Romania and Bulgaria—work 12-hour shifts during the peak production periods and are transported back to their countries of origin when work is scarce. They are hired on short-term contracts and are given notice of their shifts a week in advance at best, but often find out whether or not they have work on the same day. Furthermore, they are paid €2-2.5 (£1.47-1.83) per hour compared to directly employed workers who are paid €3-3.5 (£2.20-2.57) per hour.

In Turkey, where all the workers are domestic and employed directly, Foxconn achieves flexibility by varying the working hours from 30 to 60 per week, depending on production needs. The shifts are between 10 and 12 hours – day or night – and workers receive details about their next shift about 24 hours before, by text message. Flexibility is also achieved by hiring Turkish Bulgarian women—so called Muhacir-Bulgarians—who have a more secular worldview than locals and are more willing to work the night shift.

Low labour costs

Secondly, in both countries, Foxconn’s strategy is to drive down labour costs. In the Czech Republic, in addition to cutting costs through temp agencies, savings are also found via the so-called ‘hour-bank system’. This system dictates that directly employed labourers must work a total of 930 hours in six months. They receive the same salary each month regardless of how many hours they work but end up ‘owing’ hours to Foxconn if they fail to meet the quota.

In Turkey, Foxconn takes advantage of two government-run programmes to recruit workers as a means of driving down labour costs. The first provides internships for high school students, which are paid €100 a month for 3 days of work per week. The second, funded by the government through local employment centres, involves apprenticeships geared towards unemployed people. These are paid between €7.5 and €9.3 per day for 8 hours of work. Current Turkish legislation also permits Foxconn to average out an individual’s working hours to 45 hours a week over a two-month period, allowing the firm to avoid paying overtime on a week-by-week basis.

State support

Thirdly, both sets of operations are supported by the State. Similar to Foxconn’s operations in mainland China, the location of Foxconn’s plants is supported and facilitated by the State through significant fiscal incentives and provision of land and infrastructure. In the Czech Republic, Foxconn enjoyed a 10-year tax holiday from 2000 until 2010 and is exempt from the EU’s high tariff barriers such as the 14 percent import duty on LCD TVs. These perks came as part of the Czech Republic’s larger strategy to attract foreign investment and become “computer hub for the Western European market”.

In Turkey, Foxconn’s factory is located in the European Free Zone close to the city of Çorlu, about 100 km from Istanbul. Companies operating inside the zone are exempt from VAT and taxes on profit and wages as long as at least 85 percent of its produced goods are exported. Moreover, until recently strikes within the free zone were banned for the first ten year’s of the existence of the free zone.

Weak trade unions

Finally, the influence of trade unions is extremely limited in both the Czech Republic and Turkey. In the Czech Republic, where the trade union is plant-based, the union is primarily concerned with issues concerning directly employed workers, the majority of whom are Czech nationals. This de facto exclusion is done to protect the interests of the domestic workers, who benefit from the presence of temporary EU migrant workers because the latter group absorbs fluctuations in the demand for labour.

In Turkey, where unions are sector-based and operate in a stringent legal environment, unions have come increasingly under fire from their members for working against their interests. For example, the Turkish Metal Union (TMU)—of which a number of workers at Foxconn were members—attracted criticism during a recent round of collective bargaining in the automotive sector for its unwillingness to side with workers. TMU’s anti-labour stance prompted a wave of strikes against the union and led to direct negotiations between workers and company representatives.

Are China and Europe so far apart?

So, we can see that there are striking similarities between Foxconn’s labour management practices in mainland China and Europe. Media attention on China and portrayal of Chinese workers as passive and exploited victims of globalisation hides not only the fact that China is the “epicentre of global labour unrest”, but also the similarities in working conditions that Foxconn’s workers experience in both China and Europe. Importantly, such similarities show that while the responsibility for mistreatment of workers is with the firm, it is also with the authorities and the trade unions: they’re the ones that enable and co-produce the conditions that permit workers’ exploitation.
There are two take-home messages for research and policy interventions on transnational firms: first, pay attention to the management practices that the firm transfers from the home (i.e. China) to the host country (i.e. the Czech Republic and Turkey); second, don’t be blind to the role and interests of various local actors, who are in effect driving down wages and labour standards.

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